A couple of things could be happening.
1. There needs to be more water flow at the faucet, a minimum of .75 gallons per minute. Low flow and pressure balance faucets and aerators will not work well with tank-less water heaters. You need all the flow you can get.
2. The flame sensor in the main control unit is week, this is a common issue with your water heater.
Clean the unit to establish adequate water flow. Remove all faucet aerators and turn the faucets on to activate the unit. If you still get the on and off problem you need to call the company for a new flame sensor and/or control valve.
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